Buying Term Life Insurance

For many individuals, buying term life insurance is the best way to provide financial protection to their families in the event of an untimely death. People who are financially responsible understand that a loss of income can be devastating to those left behind. A life insurance policy provides the funds needed to pay for funeral expenses, outstanding debt, and continued household expenses. The proceeds from the policy can also be invested to provide ongoing income to a family when the breadwinner has died. This can be a very difficult subject for many families, but it's very important to discuss the family finances and to make responsible decisions regarding life insurance policies. Just think of an average family where the husband works full-time and the wife works part-time while the two children are in school. If the husband dies, the mom is left alone to raise the kids. She might not be able to make ends meet on her part-time salary. Of course, the wife can get a full-time job, but that means expensive child care bills. The wife may be forced to sell the family home and to make other very difficult decisions to take care of her children. But if the husband has an adequate policy, the wife has more of an economic cushion when it comes to making decisions. Perhaps she's able to pay off the entire mortgage on the home. It may be that money can be put aside for the children's college educations. Financial worry can be alleviated by buying term life insurance for the family's breadwinner.



However, it's not only the primary breadwinner that should have this type of coverage. Even a stay-at-home parent should look into buying term life insurance to cover final expenses. Proceeds from a policy can go toward paying final medical bills and the funeral costs. Additionally, the individual may have outstanding debts that can be covered by a policy. Even more important, though, is that a stay-at-home parent provides an economic benefit to a family that is lost when death occurs. Too often, people overlook the economic contribution of having someone at home caring for the children, preparing meals, and taking care of the home. But when that individual dies, someone is still needed for these responsibilities. The surviving parent may have to hire assistance in different areas. Here again, the proceeds from a policy can be beneficial to helping the surviving parent get through a very difficult and tragic time. At least, finances will not be an issue when the family did the responsible thing by buying term life insurance, not just for the family breadwinner, but also when a parent's economic contribution isn't as obvious as a weekly paycheck. As difficult as it is to talk about, no one escapes death. As King Solomon wrote: "To every thing there is a season, and a time to every purpose under the heaven: A time to be born, and a time to die; a time to plant, and a time to pluck up that which is planted" (Ecclesiastes 3:1-2).



Basically speaking, a term life policy provides financial protection in the event of the policy-holder's death. The policy is purchased for a set amount of time and the premiums remain the same during that term. For example, a person buying term life insurance might opt for an annual policy that can be renewed each year at a higher premium. Or the policy might be set for longer periods of time, for example, five, ten, or even thirty years. The premium starts out higher than for an annual policy, but remains the same for the entire term of the policy. The premiums for these types of policies are relatively inexpensive when compared to whole-life policies. For example, a young adult can purchase a significant amount of term insurance for a lot less than the same coverage in a whole-life policy. The whole-life policy has the advantage of the premiums staying the same over one's lifetime. It's much less expensive to buy one of these policies as a young adult than as a middle-aged adult. Yet the premiums are still higher than for term policies because of the added investment component and potential cash build-up of a whole-life policy. People who sell these policies promote both the investment and cash build-up as benefits to the policyholders. Yet there are much better investment opportunities and better ways to save cash. Many financial experts don't see whole-life policies as a good choice for most families and recommend buying term life insurance instead.



There are many financial companies that sell policies. Before buying term life insurance, potential applicants are advised to research the financial stability of the insurer. Just as there are credit reporting agencies that provide creditworthiness reports on individuals, there are also credit rating agencies that report on these various financial companies. A potential applicant can find a great deal of information just by doing a simple internet search and finding out the grade that a particular company has received from one of these credit rating agencies. Financial experts suggest that insurance purchasers select a company that is graded A or better. The top-notch companies are graded AAA. The grades are often provided at no cost, but more detailed reports may cost a nominal fee. Providing for one's family is an essential responsibility that can be taken care of by researching and buying term life insurance from a reputable company.